Annual Report 2004-05

Rs. 10 lacs = Rs. 1 million

AWARDS IN THE YEAR 2004-05

Leading Indian business magazine Business Today, in a survey, rated us Best Bank in India for the second consecutive year. HDFC Bank has been named Best Domestic Bank in India Region in The Asset Triple A Country Awards 2004 and 2003. HDFC Bank was selected by BusinessWorld as One of India's Most Respected Companies as part of The Business World Most Respected Company Awards. Forbes Global named us in its listing of Best Under a Billion, 100 Best Smaller Size Enterprises in Asia/ Pacific and Europe, in its November 2004 issue. Hong Kong-based Asiamoney magazine named the Bank: l Best Overall Local/Domestic Bank India in the Corporate Cash Management Poll. l Overall Most Improved Company for Best Management Practices in India in the Best Managed Companies Poll 2004. l Best Local Cash Management Bank. l Best Overall Domestic Trade Finance Services Award. HDFC Bank won the award for Operational Excellence in Retail Financial Services - India as part of the Asian Banker Excellence in Retail Financial Services Programme 2003.

Rs. 10 lacs = Rs. 1 million

TEN YEARS OF EXCELLENCE

On the 18th of February, 1995, the then finance minister, Dr. Manmohan Singh, inaugurated the first branch of a new bank called HDFC Bank. Promoted by India's premier housing finance institution, it was the first private sector bank to have received a license from the Reserve Bank of India, after the banking sector was thrown open to new players. Driven by the vision and leadership of a highly respected senior management team, and thanks to the dedicated efforts of thousands of employees over the last 10 years, your bank has today emerged as one of the leading banks in the country. From the beginning, HDFC Bank began operations with the mission of becoming a World-class Indian Bank, and the endeavour of fulfilling all the financial requirements of our customers under one roof. Over the years, by delivering superior financial products and services, your bank has built a stable and long-lasting relationship with nearly seven million customers, without compromising our standards for maintaining high quality associations. Our culture for learning; our quick absorption of latest and best technologies; and our unwavering adherence to best practices in governance have been the core strengths that have brought us to our present position. Constantly learning through our growth, we have continued to use the dividends of our leadership position to fuel further expansion and presence. Today, ten years later, we are the market leader, or one of the top three, in most of the segments that we operate in. Today, our bank is recognised by many to be the best in many respects. However, for us, our journey to be pre-eminent in every possible sphere continues, and our drive to become even better at serving our customers becomes stronger. For us, it starts with the same passion we started with ten years ago. Every day.

Rs. 10 lacs = Rs. 1 million

Fulfilling our Social Responsibility

... A few small steps

The Bank has provided sponsorship for a Water Project and a Higher Secondary School Programme

Rs. 10 lacs = Rs. 1 million

HIGHLIGHTS

Profit after tax up by 30.6% to

Earnings per share increases from Rs. 17.95 to

Dividend per share increases from Rs. 3.50 to

Rs. 665.6 crores

Rs. 22.92

Rs. 4.50 (proposed)

Savings deposits
up from Rs. 7,804 crores to

Balance Sheet size

up from Rs. 42,307 crores to

Retail assets
up by 35.4% to

Rs. 11,418 crores

ATM Network
up from 910 to

Rs. 51,429 crores

Rs. 9,918 crores

1147 ATMs

Branch Network
up from 312 to

Phone Banking
coverage in

Point -of-sales (POS) Terminals

at merchant outlets up from 26,400 to

120 cities

467 outlets

41,685 terminals

Rs. 10 lacs = Rs. 1 million

TEN YEARS OF EXCELLENCE

The milestones that we have crossed over the last ten years continue to be a great motivator to create extraordinary results. The future depends on what we do in the present.

Received banking licence and entered into strategic alliance with National Westminster Bank group. HDFC Bank formally inaugurated by the then Finance Minister HDFC given Dr. Manmohan Singh. "in principle" approval to start a HDFC Bank commercial launches bank. its IPO of Rs.500 million eliciting a Company incorporated. record 55 times oversubscription.

Total balance sheet size crosses Rs.10 billion (Rs.1000 crore). Launched its Appointed first retail clearing bank lending product by the NSCCL - Loans against heralding the Declared Shares. genesis of maiden what was to dividend RoE crossed become a of 8% on 20% for major "capital equity shares markets for year-end financial year ended March infrastructure" March 31, 1997. 31, 1998 at business. 23.9%. Launched retail investment Branch network touched 50. advisory services.

1994

1995

1996

1997

1998

Rs. 10 lacs = Rs. 1 million

Bank launched Bank signed MoU Mobile Banking (SMS based) for strategic a first in India. business collaboration with Chase Manhattan Amalgamation of Bank. Natwest TimesBank Ltd. with group exits. HDFC Bank another first in the Launched online, Indian banking sector. Customer base real-time crossed 1 million. NetBanking. Branch network crossed 100 branches (111 as at Launched first and international March 31, 2000),total Debit balance sheet size Card in India. crossed Rs.100 billion (Rs.116 billion as at March 31, 2000). Business Today Best Private Sector Bank Named by in India Award. The Asian Bankers Journal as Best Domestic Named by The Commercial Bank Asian Bankers India. Journal as "Best Domestic Euromoney Best Commercial Domestic Bank Bank India. in India. Euromoney "Best Bank India. Business India Indias Best Bank.

Became first private sector bank authorised to collect Income Tax for Central Government. Bank listed its stock on NYSE through ADS issue of US $172.5 million. Launched Credit Card business in Chennai. Named in the Forbes Global list of The 300 Best Small Companies in the world and as one of the 20 for 2001 best small companies in the world. Named by The Asian Bankers Journal as "Best Domestic Commercial Bank India. Emerging Company of the Year 2000-01 in The Economic Times Awards for Corporate Excellence. Euromoney Best Bank in India. Finance Asia Best Domestic Commercial Bank India. Branch network touched 200. Named by Asiamoney as Best Commercial Bank in India 2002. Named by The Asian Bankers Journal as Best Local Bank India. Euromoney Best Bank in India. For use of IT, recognised as a Computerworld Honors Laureate and awarded the 21st Century Achievement Award for Finance, Insurance & Real Estate category by Computerworld, Inc., USA.

Business Today Best Bank in India Award. Named in the Forbes Global ranking of Best Under a Billion, 200 Best Small Companies. Best Domestic Bank in India Region in The Asset Triple A Country Awards.

Credit Card launched in over 100 cities. Credit Card base crosses one million. Branch network touches 400. Business Today Best Bank in India Award. Named in the Forbes Global listing of Best Under a Billion, 100 Best Smaller Size Enterprises in Asia/Pacific and Europe.

Best Overall Local/ Domestic Bank Best Domestic India in a Bank in India Asiamoney Region in The Asset Corporate Cash Triple Management Poll. A Country Awards. Named by The Asian Bankers Journal as Best Local Bank India. Best New Private Sector Bank 2003 in the Financial Express - Ernst & Young Best Banks Survey. Named by Outlook Money as Best Bank in the Private Sector.

Finance Asia "Best Finance Asia "Best Domestic Domestic Commercial Bank India. Commercial Bank India.

Named One of India's Most Respected Companies as part of The Business World Most Respected Company Awards. Named Overall Most Improved Company for Best Management Practices in India by Asiamoney.

Won the award for Operational Excellence in Retail Financial Services Named by NASSCOM - India as part of and the Asian Banker Finance Asia economictimes.com Awards 2003. Best Commercial the Best IT User in Bank India. Banking at the IT Bank plans add-on Users Awards. ADS issue of US$ 300 million (listed on NYSE in Finance Asia Best January 2005). Local Bank India.

1999

2000

2001

2002

2003

2004

Rs. 10 lacs = Rs. 1 million

FINANCIAL HIGHLIGHTS

1995-96
Interest Income Interest Expense Net Interest Income Other Income Net Revenues Operating costs Operating Result Provisions and Contingencies Profit before tax Provision for taxation Profit after tax Funds : Deposits Subordinated debt Stockholders Equity Working Funds Loans Investments Key Ratios : Earnings per share (Rs) Return on Average Networth Tier 1 Capital Ratio Total Capital Ratio Dividend per share (Rs) Dividend payout ratio Book value per share as at March 31 (Rs) Price to Earnings Ratio Rs. 10 Lac = Rs. 1 Million 1.04 9.62% 23.40% 23.53% 11.10 31.12 685,70 221,08 992,29 368,62 314,28 114,56 70,84 43,72 13,15 56,87 22,67 34,20 5,95 28,25 7,97 20,28

1996-97
161,74 87,18 74,56 29,40 103,96 42,18 61,78 3,73 58,05 17,55 40,50 1,279,07 243,98 1,815,26 575,26 729,72 2.03 17.42% 13.00% 13.02% 0.80 43.46% 12.20 45.20 22.32

Market price per share as at March 31 (Rs)* 32.40

Rs. 1 Crore = Rs. 10 Million

Rs. 10 lacs = Rs. 1 million

(Rs. lacs) 1997-98

240,80 137,55 103,25 61,05 164,30 62,71 101,59 7,24 94,35 31,20 63,15 2,191,74 100,00 285,13 2,829,98 841,98 1,121,33 3.16 23.87% 10.21% 13.92% 1.00 34.84% 14.30 70.80 22.42

1998-99
376,08 229,18 146,90 67,13 214,03 88,79 125,24 8,39 116,85 34,45 82,40 2,915,11 135,00 338,93 1,400,56 1,903,80 4.12 26.41% 8.34% 11.86% 1.30 34.71% 16.90 69.15 16.78

1999-00
679,87 374,28 305,59 119,54 425,13 171,39 253,74 58,89 194,85 74,81 120,04 8,427,72 150,00 751,52 3,462,34 5,748,28 5.93 29.00% 9.56% 12.19% 1.60 29.96% 30.90 257.20 43.37

2000-01
1,259,46 753,75 505,71 176,57 682,28 309,59 372,69 57,63 315,06 104,94 210,12 11,658,11 200,00 913,09 15,617,33 4,636,66 7,145,14 8.64 24.53% 8.69% 11.09% 2.00 25.55% 37.50 228.35 26.43

2001-02
1,702,99 1,073,74 629,25 335,90 965,15 417,95 547,20 121,82 425,38 128,34 297,04 17,653,81 200,00 1,942,28

2002-03
2,013,61 1,191,96 821,65 465,55 1,287,20 577,05 710,15 139,30 570,85 183,25 387,60 22,376,07 200,00 2,244,83

2003-04
2,548,93 1,211,05 1,337,88 480,03 1,817,91 810,00 1,007,91 288,95 718,96 209,46 509,50 30,408,86 600,00 2,691,88 42,306,99 17,744,51 19,256,79 17.95 20.14% 8.03% 11.66% 3.50 22.15% 94.52 378.75 21.10

2004-05
3,093,49 1,315,56 1,777,93 651,34 2,429,27 1,085,40 1,343,87 364,93 978,94 313,38 665,56 36,354,25 500,00 4,519,85 51,429,00 25,566,30 19,349,81 22.92 20.44% 9.60% 12.16% 4.50** 24.00% 145.86 573.64 25.03

4,349,96 11,731,03

23,787,38 30,424,08 6,813,72 11,754,86 12,004,02 13,388,08 11.01 18.30% 10.81% 13.93% 2.50 23.68% 69.00 236.60 21.50 13.75 18.10% 9.49% 11.12% 3.00 24.72% 79.60 234.55 17.06

**Proposed

*Source : NSE

Rs. 10 lacs = Rs. 1 million

BOARD OF DIRECTORS
Mr. Jagdish Capoor, Chairman Mr. Aditya Puri, Managing Director Mr. Keki Mistry Dr. (Mrs.) Amla Samanta (up to April 25, 2004) Mr. Anil Ahuja Dr. Venkat Rao Gadwal Mr. Vineet Jain Mrs. Renu Karnad Mr. Arvind Pande Mr. Ranjan Kapur Mr. Bobby Parikh Mr. Ashim Samanta (w.e.f. November 19, 2004)

VICE PRESIDENT (LEGAL) & COMPANY SECRETARY

Sanjay Dongre

AUDITORS
M/s. P. C. Hansotia & Co.
Chartered Accountants

REGISTRARS & TRANSFER AGENTS SENIOR MANAGEMENT TEAM

A Parthasarathy A Rajan Abhay Aima Bharat Shah C.N. Ram G Subramanian Harish Engineer Neeraj Swaroop Paresh Sukthankar Samir Bhatia Sudhir M Joshi Vinod G Yennemadi MCS LIMITED Sri Venkatesh Bhavan, Plot No. 27, Road No. 11, MIDC Area, Andheri (East), Mumbai 400 093. Tel: 2821 5235/6/7 Fax: 2835 0456 Email: mcssvb@eth.net

REGISTERED OFFICE
HDFC Bank House, Senapati Bapat Marg, Lower Parel, Mumbai 400 013. Tel: 5652 1000 Fax: 2496 0739 Website: www.hdfcbank.com

Rs. 10 lacs = Rs. 1 million

11TH ANNUAL GENERAL MEETING

Date: Day: Time: Place: June 17, 2005 Friday 3:30 p.m. Birla Matushri Sabhagar, 19, New Marine Lines, Mumbai 400 020 May 28, 2005 to June 17, 2005 (both days inclusive)

Book Closure: Dates

CONTENTS
Directors Report Auditors Report Balance Sheet Profit & Loss Account Cash Flow Statement Schedules to the Accounts Summarised US GAAP Financial Statements Auditorss Certificate on Corporate Governance Corporate Governance Key Comparative Between U.S. and Indian Regulations

PAGE
1 - 15 16 17 18 19 - 20 21 - 55 56 - 63 64 65 - 83 84 - 85

Rs. 10 lacs = Rs. 1 million